DEAR Dr. Fadhlullah,
I refer to the list of my 15 questions to Digital Nasional Bhd (DNB) and the 21-page reply by the CEO of DNB to these questions. I also refer you to the list of 10 questions to the mobile network operators (MNOs). I attached the one-page reply to my list of questions from the MNOs below.
Since the MNOs have confirmed that they have proposed a Dual Wholesale Network (DWN) model to the government of Malaysia, I believe the Malaysian public has the right to know the details of and understand the implications of the DWN proposal by the MNOs. I also believe that as the independent regulator of the telecommunications sector, MCMC should have its own publicly stated position on this industry proposal. As such, I put forth the following questions for you to respond to publicly in your capacity as chairman of MCMC:
1. Does MCMC support a move from a Single Wholesale Network (SWN) model to a DWN model as proposed by the MNOs? If the answer to this question is yes, what has changed since MCMC’s statement on March 2, 2021 entitled “MCMC’s Oversight of Digital Nasional Berhad – the Government of Malaysia’s Special Purpose Vehicle for 5G” where MCMC stated that “by removing the need for existing telecommunications companies to invest in 5G networks, their efforts and resources can continue to be focused on improving and expanding 4G services and fibre networks under Jendela so crucial for the success of 5G deployment. This at the same time will ensure that the digital gap can be minimised”.
2. DNB has explained its structure and operating model publicly and openly, and has conducted many stakeholder briefings including to MPs. Will the details of the DWN model that is being proposed by the MNOs be also published for stakeholders including MPs to view and provide feedback on? From a transparency perspective, is it not important for the telco industry to comply with the same standards as DNB, all of which are regulated by MCMC?
3. One of the most important questions to do with the DWN model is whether the MNOs will be allowed to focus on the more profitable urban areas and follow a “demand-led” model of 5G deployment. Does MCMC agree with a DWN model where the MNO-led consortium will be allowed to focus largely in the more profitable urban areas following a “demand-led” model of 5G deployment and leave DNB to focus on the less profitable semi-urban and rural areas following a “supply-led” model? (In other words, let the private sector reap the profits of 5G deployment and leave the government to pay for the costs of 5G roll-out in the non-profitable, largely rural areas)
4. If the DWN model mentioned in 3 is what the MNOs are proposing, what implications would this have on the financial sustainability of DNB? If for example, the MNOs are allowed to focus only on the more profitable urban areas, does this mean that DNB will not receive any or very little revenue from the MNOs for access to DNB’s 5G network in the rural areas? If this is the case, what is the likelihood that DNB will have to “close shop” leaving only the MNO-led consortium remaining in the 5G deployment space, thereby turning the DWN into a SWN model but one that is completely owned and controlled by the private sector?
5. What are the financial implications to the government of Malaysia (GoM) if we move from a SWN model to a DWN model? How much would the GoM have to spend to cover the 5G deployment costs for DNB which cannot be recouped back from charges to the MNOs (because of lower demand in the rural areas?) Would DNB be able to borrow money from the open market and institutional investors in a DWN business model environment? How much more in terms of interest service charges would DNB have to pay in a DWN versus SWN business model environment? What are the possible legal liabilities that DNB would have to face from its suppliers, contractors and vendors including Ericson?
6. If there is a decision by the cabinet that Malaysia should change from a SWN to a DWN that is similar to what has been proposed by the MNOs, how much would this change/delay the deployment of 5G in the country? Keep in mind that Malaysia is already lagging behind our neighbours in terms of 5G deployment and this has resulted in Malaysia losing our competitive edge in terms of mobile download speeds according to a recent industry report.
At the end of the day, I very much believe that MCMC must play its role of an independent regulator to safeguard the long-term interests of the Malaysian public. MCMC must make the details of the DWN model proposed by the MNOs public and it must take a clear position on the implications of such a proposal to the 5G roll-out plan from as holistic a perspective as possible. – The Vibes, February 19, 2022
Ong Kian Ming is Bangi MP and DAP assistant political education director
